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EU clears state aid to Irish CUs

DUBLIN, Ireland (12/21/11)--The Irish government can bail out distressed credit unions in the country, said the European Commission Tuesday.

The commission said the resolution plan for distressed Irish credit unions was in compliance with European Union rules that provide aid to help remedy a serious economic disturbance in a member state (aibcorporate.com Dec. 20).

However, the actions taken must provide safeguards to avoid harming competition, ensure proper burden-sharing, and be limited in time--the authorization is granted until June 2012--and scope.

The Irish plan fulfills those conditions, Joaquin Almunia, commission vice president in charge of competition policy, said in a statement.

The plan ensures that a failing credit union sufficiently contributes to its exit costs while all its assets and liabilities are transferred to the buyer, and that the aid provided the credit union is the minimum necessary to facilitate the process, Almunia said.

Also, the process will prevent a buyer from gaining an unfair economic advantage through acquisition of underpriced assets, Almunia added.